Budget Deal Hurts the Unemployed, Misses the Point

The bipartisan budget deal reached Tuesday by House Budget Committee chair Paul Ryan, Republican of Wisconsin, and Senate Budget Committee chair Patty Murray, Democrat of Washington, lifts the drastic sequester cuts on military and domestic programs, shifts cuts to other programs, and marks a cease-fire in the budget wars in Washington.

Widely praised as a breakthrough in "partisan gridlock," and a way forward toward negotiating a "grand bargain" to reduce the future costs of Medicare, Medicaid, and Social Security, the deal, while not dramatic, is big political news.

The worst element is the failure to extend long-term unemployment benefits, which will mean a hard, cold holiday season for the 1.3 million jobless Americans who will see their federal benefits under the Emergency Unemployment Compensation program cut off on December 28.

As Jim Pethokoukis, the Money and Politics columnist for that noted socialist organization the American Enterprise Institute observed: "If there was ever time to err on the side of overextending jobless benefits, it would be now."

In a weak economic recovery, with "millions of workers suffering -- financially, emotionally, spiritually," Pethokoukis and AEI colleague Michael Strain of the Weekly Standard point out, "Society is also suffering ... our country is less dynamic, vibrant, and thriving."

But even those who take issue with the budget deal's plan to throw people off unemployment three days after Christmas are getting behind the agreement.

"This deal demonstrates that Republicans and Democrats in Congress can work together on a proactive basis, rather than relying on 11th hour deals and governing by crisis," the group declared in a press release. "... it is a small start that this agreement takes a responsible and bipartisan approach to dealing with policy trade-offs and paying for necessary changes instead of adding to the deficit."

Never mind that austerity during an economic downturn is a recipe for disaster, that Mitt Romney and Paul Ryan lost the last election by running on reducing deficits with drastic cuts, or that jobs are America's top priority.

Despite the squawkings of deficit hawks like Ryan, Reich points out, "The deficit shouldn't even be an issue."

The real problem facing America is not federal budget deficits or the national debt, but the fact that so many Americans have stopped looking for work. Meanwhile, Reich points out "95 percent of the economic gains since the recovery began in 2009 have gone to the top 1 percent," median income continues to drop, and the number of people in poverty continues to rise.

Further cuts will only hurt the economy.

In this context, the failure to extend unemployment benefits is "appalling," says Laura Dresser, an economist with the Center on Wisconsin Strategy (COWS).

"The bottom line is, we just made a deal that slightly improves on a really bad deal -- the sequester -- that was designed to be totally unpalatable," says Dresser.

"We added some fees on travelers and made people contribute more to their pensions. But here we are still having the conversation about how to cut government," Dresser says, "instead of how to improve the prospects of the long-term unemployed and improve the overall economy, which would take expanding spending, not shrinking it."

"It may be slightly better than the sequester," Dresser concludes. "But it's still exactly the wrong thing to do for the economy and for the longterm unemployed, especially."

The right thing to do is what President Obama spelled out in his speech last week on economic mobility at the Center for American Progress.

In that speech, Obama addressed what he called "growing inequality and lack of upward mobility that has jeopardized middle-class America's basic bargain -- that if you work hard, you have a chance to get ahead."

In his statement praising the budget deal, he repeated a phrase from that speech: "making sure the economy works for every American."

And he called on Congress to extend unemployment.

More than anything, we need the President and members of Congress to fight for that fairer economy. We need to change what Robert Reich calls the "triumph of the right" in shaping the national conversation on the budget, spending, and deficits, and refocus on what really matters to the vast majority of Americans: inequality, shrinking economic opportunity, and a Wall Street cabal that is determined to concentrate wealth in a very few hands and leave the rest of us strapped.